Should rent reviews be linked to inflation, specifically the Retail Price Index (RPI), or is it better to let the Open Market decide?
RPI is a measure of inflation published monthly by the Office for National Statistics (ONS). It tracks the changing cost of a fixed basket of goods and services over time and is produced by combining around 180,000 individual prices for over 650 representative items. It is now generally considered that the Consumer Price Index (CPI) offers a more accurate measure of inflation. However, most indexed-linked rent reviews still refer to RPI rather than CPI.
Rent Review provisions in most leases are bench-marked to the open market. However, some are linked to inflation; principally the Retail Price Index (RPI). A landlord may favour RPI at review, because of the associated certainty. This article, however, tests the hypothesis that a RPI-linked rent review can be advantageous for an occupier. It is focused on the industrial and logistics sector.
